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Unformatted text preview: Economics 277A: Behavioral Economics (Theory) (also known as: Psychology &amp; Economics) Winter 2011 Course Information Instructor: Zack Grossman Office: NH 3049 Email: grossman[at]econ OH: R 2-3, and others times by appointment Lectures: T,R 11 - 12:15, NH 2212 Website: http://econ.ucsb.edu/ ~ grossman/Econ277AW11 Description This course provides an overview of topics in behavioral economics, which integrates insights from psychol- ogy and other social sciences into models of economic behavior. The focus will be on modeling the findings of research demonstrating departures from rationality, self-interest, and other classical assumptions, such as time consistency, outcome-based preferences, etc. We will motivate each topic by looking at the behavioral evidence, then examine formal assumptions reflecting this evidence in a way that can be used by economists. Because of time constraints, we will not be able focus much on applications and empirical tests and, ac- knowledging the current lack of a complementary course on economic applications and empirical methods, I have provided a reading list of relevant empirical papers for most topics. This course does not present an alternative to mainstream economics. Rather it is proudly mainstream. While the material may be unlike what youve seen in other courses, that is merely because it addresses psychological phenomena that are not yet totally integrated into economic analysis. The goal is to improve the psychological realism of formal economic assumptions in certain areas where it is importantly lacking, so as to use classical economic approaches to improve our answers to classical economic questions. This course is not about the philosophy or methodology of economics, non-psychological models of bounded rationality, evolutionary economics, or experimental economics. These are generally useful and interesting topics, but not the direct focus of this course. Requirements Readings: There is no textbook per se , but many of the readings will be drawn from Choices, Values, and Frames (2000), edited by Daniel Kahneman and Amos Tversky (hereafter CVF). I strongly recommend that you purchase this book. Most other readings are available online. Those that are not available online Ill distribute in class a week in advance. Problem Set Answers: You will complete two problem sets. Each has three questions and is worth 15% of your grade. Problems arent meant to be simple. You are encouraged to work together on the problems and to come see me for help before they are due. You are to write them up separately, though, and what you hand in should reflect you own understanding. Please make some effort to write legibly and to present your answers clearly and succinctly. Problems will frequently require substantial math; you are welcome and encouraged to hand in all the work you did to reach an answer, but please make some effort to provide guidance through your steps of reasoning, and to flag work that will be superfluous to the reader (me). The technical difficulty ofreasoning, and to flag work that will be superfluous to the reader (me)....
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